Wednesday, June 4, 1997
How a Fool and a
Saved the Country
The grandkids gather around, and once again, they want "the story." "Grandpa, tell us again how you saved everybody!"
"Well," I say, "to be fair, I just started it. It all began one day, fifteen years ago. I was listening to the radio and I heard how you could double your money every two-and-one-half to four months using this one man's system. So I called him up and made a proposition. I would donate $1000 to him and he would invest it." "And what else?" the kids ask. "Nothing," I said. "I just told him to invest it, keep it growing, and pay the taxes. Oh, and give me back two percent of what he had at the end of seven years."
"Now kids," I added, "I know you can't imagine it now, but back then, although we were a strong and prosperous nation, we had our problems. Our debt was approaching 6 trillion dollars, for instance."
"But all that's fixed now," the kids chorus.
"You bet," I reply. "He was able to get the money to double every three months, dead in the middle of the range he quoted, so my money multiplied by about 8 times each year. Of course, he had to pay taxes on the money, at the maximum rate of forty percent." So the money grew like this:
After year one the initial $1,000 grew to $8,000, he paid $3,200 in taxes and had $4,800 to begin year two. And so on. After year seven, he had expanded the portfolio to $97.8 million, so he owed me just under $2 million as my return on the initial $1,000 donation. By the end of fifteen years, the portfolio had grown to $16 trillion. But even better for the country, he had paid a total of $10.7 trillion in taxes.
"So," I concluded, "as you kids know, he's the only one who has to pay any more taxes, and they're starting to wonder what to do with all the money. His taxes next year will wipe out what's left of the national debt, and they expect to have to start paying everyone in the country money back from the surplus. You know, kids, there's still one thing I've always wondered."
"What's that, Grandpa?"
"Well, with a system that can multiply money like this, why did he ever bother to sell it?"